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C. HARI SHANKAR
Garg Builders – Appellant
Versus
Hindustan Prefab Limited – Respondent
JUDGMENT
1. Hindustan Prefab Limited (HPL) invited tenders from interested bidders for construction activities to be carried out at various locations in the country. With respect to three of the tenders thus floated, the petitioner Garg Builders was the successful bidder.
2. Tenders were awarded to the petitioner, by HPL, for carrying out of construction activities at Ghaziabad, Uttar Pradesh, Raipur, Chhattisgarh and Asansol, West Bengal vide Letters of Award dated 3rd March, 2016, 9th January, 2017 and 4th August, 2018, followed by agreements dated 21st March, 2016, 25th January, 2017 and 25th September, 2018 respectively.
3. Each of these Agreements required the petitioner to provide Bank Guarantees towards security deposit as well as Performance Bank Guarantee (PBGs). Bank Guarantees, as so required, were undisputedly furnished by the petitioner to HPL. All the Bank Guarantees were issued by HDFC Bank Ltd. ('the Bank') which is, accordingly, Respondent 2 in these three petitions.
4. Disputes arose between the petitioner and HPL in respect of all these three contracts. The co
The invocation of an unconditional bank guarantee can only be interdicted in exceptional circumstances, such as egregious fraud, irretrievable injustice, or special equities.
The Court held that the invocation of the bank guarantees by HPL was in accordance with the terms of the bank guarantees and that there was no case for interdicting invocation of the bank guarantees.....
A confirmed Bank Guarantee/irrevocable Letter of Credit cannot be interfered with unless there is established fraud or irretrievable injustice involved in case.
Bank guarantees are independent and unconditional contracts, and courts should refrain from interfering with their invocation unless exceptional circumstances such as fraud or irretrievable injury ar....
The court emphasized the independence and unconditional nature of bank guarantees, while recognizing exceptions such as fraud, irretrievable injustice, or special equities.
Unconditional bank guarantees may only be reviewed for egregious fraud or irretrievable injustice; disputes over contract performance must be resolved through arbitration.
Bank guarantees can be invoked regardless of disputes, unless fraud or irretrievable harm is clearly established.
The court clarified that injunction against unconditional bank guarantees requires proof of egregious fraud, irretrievable injustice, or special equities, none of which were sufficiently substantiate....
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